100-Years-of-the-American-Economic-Review-The-Top-

AmericanEconomicReview101(February2011):1–8=10.1257/aer.101.1.11TheTop20Committee,consistingofKennethJ.Arrow,B.DouglasBernheim,MartinS.Feldstein,DanielL.McFadden,JamesM.Poterba,andRobertM.Solow,wasappointedbyRobertMoffittwiththetaskofselectingthe“Top20”articlespub-lishedintheAmericanEconomicReviewduringitsfirsthundredyears.Wedecidedagainsttryingtodefineformallythecriteriaforinclusion:theysurelycomprisesheerintellectualquality,influenceontheideasandpracticesofeconomists,andgeneralsignificanceorbreadth;butitwouldbefruitlesstotrytospecifythemarginalratesofsubstitutionamongtheseandotherqualities.Wewerelookingfor20admirableandimportantarticles.AsastartingpointweusedcitationcountsandnumbersofsearchesinJSTOR.Thisisobviouslyimportantandrelevantinformation,butnotdecisiveonitsown.Citationcountsarebiasedinfavorofsubfieldsofeconomicswiththelargestpopu-lations.Thereisalsoabiasinfavorofmoderatelyrecentarticles,ifonlybecausethenumberofpotentialreadersandwritershasbeenincreasingintime;veryrecentarticlessufferfromthefactthatcitationsbuildupovertime.Inanycasewewereexpectedtouseourjudgmentaboutqualityandsignificance.SoweusedthecitationandJSTORdataonlytogiveusalargegroupofeligibles.WeworriedespeciallyaboutoverlookingarticlesintheveryearlydaysoftheAER,somebygreatnamesinthehistoryofeconomics.Butwefound,justtotakeonestrikingexample,thatalthoughIrvingFisherpublishedseveralarticlesinthejournal,theywereallminororephemeralpieces.Intheevent,ourearlyballotsshowedanencouragingunanimityornear-unanim-ity,especiallyabouttheleadingcandidates.WeveryquicklyconvergedontheTop15articles.Therewereoccasionaldifferencesofopinion,onlytobeexpectedfromagroupwithdiverseinterests,aswefilledintheremainingthreetofiveplaces.Hereisourfinallist,arrangedalphabetically,alongwithabriefreminderabouteach.Therearefew,ifany,surprises.100YearsoftheAmericanEconomicReview:TheTop20ArticlesByKennethJ.Arrow,B.DouglasBernheim,MartinS.Feldstein,DanielL.McFadden,JamesM.Poterba,andRobertM.Solow**Arrow:StanfordInstituteforEconomicPolicyResearch(SIEPR),Stanford,CA94305;Bernheim:StanfordUniversityDepartmentofEconomics,EconomicsBuilding,247Stanford,California94305;Feldstein:NationalBureauofEconomicResearch,1050MassachusettsAvenue,Cambridge,MA02138;McFadden:UniversityofCalifornia,Berkeley,DepartmentofEconomics,508-1EvansHall,Berkeley,CA94720;Poterba:MITDepartmentofEconomics,50MemorialDrive,BuildingE52,Room350,CambridgeMA02142;Solow:MITDepartmentofEconomics,50MemorialDrive,BuildingE52,CambridgeMA02142.WethankJeffreyHovisandAndrewMcLetchieofJSTORfortheirassistance.The20articlesfeaturedinthispaperareavailableintheonlineversionat=10.1257/aer.101.1.1.2THEAMERICANECONOMICREVIEWFEBRuARy2011Alchian,ArmenA.,andHaroldDemsetz.1972.“Production,InformationCosts,andEconomicOrganization.”AmericanEconomicReview,62(5):777–95.Whatisthespecialroleofthefirminorganizingproduction?Theauthorsarguethatitistheabilitytomeasureinputsandtheirproductivityandtoallocatehiredresourcesinproductioninvolvingthecooperationofmanyinputs.Itisthisphe-nomenonthatexplainswhyallcooperationoffactorsdoesnottakeplacethroughmarket-determinedcontracts.Thefirmismadetobetheresidualclaimantbecausethatapproachcreatestheappropriateincentivesformanagement.Manyimplica-tionsofthishypothesisaredeveloped.Arrow,KennethJ.1963.“UncertaintyandtheWelfareEconomicsofMedicalCare.”AmericanEconomicReview,53(5):941–73.Thispaperprovidedaframeworkforthinkingabouttheeconomicsofthemarketformedicalcareusingthelanguageandtoolsofmodernmicroeconomics.Itarguedthattheaforementionedmarketisbesetbymarketfailuresbecauseconsumersareexposedtorisksthatarenotfullyinsurable(inlargepartduetoproblemsofmoralhazard),andbecausetheylacktheinformationandexpertiserequiredtoassessrisksandtreatments.Ithypothesizedthatvarioussalientfeaturesoftheinstitutionsgoverningtheprovisionofmedicalcarearebestunderstoodassocialadaptationsaimedatredressingtheresultinginefficiencies.Italsonotedthatinsomecasesthoseinstitutionaladaptationsunderminecompetitionandperverselycontributetoineffi-ciency.Thoughwrittenwellpriortotheemergenceoftheformalliteratureonasym-metricinformation,thepaperanticipatedmanyofthecentralissuesthatcontinuetooccupyhealtheconomiststoday.Cobb,CharlesW.,andPaulH.Douglas.1928.“ATheoryofProduction.”AmericanEconomicReview,18(1):139–65.Theclichésurelyapplieshere:thispaperneedsnointroduction.Theconvenienceandsuccessoftheconstant-elasticityCobb-Douglasfunctionhasspreaditsusefromrepresentingproductionpossibilities,whichwasofcourseitsoriginaluse,torepresentingutilityfunctionsandtomuchelsethroughoutempiricalandtheoreticaleconomics.CobbandDouglasexploredtheelementarypropertiesandimplicationsofthefunctionalform,andpointedtotheapproximateconstancyoftherelativesharesoflaborandcapitalintotalincomeasthevalidatingempiricalfact.Deaton,AngusS.,andJohnMuellbauer.1980.“AnAlmostIdealDemandSystem.”AmericanEconomicReview,70(3):312–26.Avastindustryinappliedeconometricsanalyzesthedemandforspecificprod-ucts,andtheimpactonco